The U.S. Treasury Department has designated two of Latvia’s smaller banks as “primary money laundering concerns” and is proposing that American banks be forbidden from dealings with them.
Multibanka and VEF banka, both based in Rīga, were singled out under a provision of the USA PATRIOT Act, approved by Congress in the wake of the Sept. 11, 2001, terrorist attacks in New York and Washington, D.C. The act generally addresses concerns about terrorism.
“These two Latvian banks represent a danger to the international community because they facilitate the placement and movement of dirty money in the global financial system,” Daniel Glaser, the Treasury Department’s deputy assistant secretary for terrorist financing and financial crimes, said in a statement released April 21.
“This action has been taken to protect the U.S. financial system from abuse,” the U.S. Embassy in Rīga announced in a separate press release, “and comes after a lengthy U.S. government review of VEF Bank’s and Multibanka’s business practices and compliance with international anti-money laundering norms.”
Spokespeople for the two banks were not immediately available for comment.
Multibanka, Latvia’s oldest commercial bank, was founded in 1988 as a branch of the Soviet Union’s Foreign Economic Relations Bank and was nationalized in 1991. It ranked as the nation’s 15th largest bank out of 23 listed by the Association of Latvian Commercial Banks.
The Treasury Department said that a large share of Multibanka’s activity involves transferring money out of Latvia, that Russian and other shell companies have used the bank to facilitate financial crime, and that some criminals have used the bank in cases of financial fraud.
VEF banka was founded in 1992. It is the 21st largest bank in the nation.
The bank was singled out because of what the Treasury Department says are VEF’s lax controls against money laundering and because less than 20 percent of those who use the bank’s confidential services are Latvian residents.
Although the U.S. Embassy emphasized that the Treasury Department’s action is aimed at the two banks and not at the Latvian banking system, it urged the Latvian government to take “aggressive steps” to stem money laundering.
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